If a covered person sues a non-covered party (like a manufacturer of a defective seatbelt), what can be recovered and what lien applies?

• A. Non-economic loss is recoverable; no lien
• B. Basic economic loss is recoverable; insurer who paid first-party benefits has a lien to the extent of benefits paid
• C. Punitive damages are recoverable; lien for legal fees
• D. No recovery is allowed for any losses

Answer: (B)

In New York no-fault law, when a covered person sues a third party (a non-covered party such as a defective seatbelt manufacturer), the plaintiff can recover basic economic losses from that third party. Those basic economic losses include medical expenses, wage loss, and replacement services. Non-economic damages (like pain and suffering) are not recovered from the third party through no-fault, so they don’t apply here unless another theory allows them. At the same time, the no-fault insurer that paid benefits has a lien on any third-party recovery to the extent of the benefits it already paid, so the insurer is reimbursed from the recovery up to that amount. Put together, the correct outcome is recovering basic economic loss with an insurer’s lien for benefits paid.